Exclusive: Gansu Race Organizer Won the Job Through Competitive Bidding

The organizer of the ultramarathon in northwestern China’s Gansu province that turned deadly over the weekend won the job of conducting the race in a competitive procurement process, according to contract documents obtained by Caixin.

Gansu Shengjing Sports and Culture Development Co. Ltd., a small, 6-year-old business with an executive team of temporary hires, won the job of conducting the first race in 2018 through a public bidding process. The company also managed the event in the succeeding three years, but those contracts were arranged in competitive procurement negotiations, the documents show. The only two other bidders this year had close ties with Shengjing, Caixin learned.

In the 100-kilometer May 22 cross-country race, 21 of the 172 runners died amid freezing weather and inadequate precautions and aid.

Authorities in Gansu launched a joint probe into the race to investigate the cause of the deaths as well as the organizer, officials said Tuesday. The authorities said they invited experts from national organizations to participate, including the General Administration of Sport and the China Meteorological Administration.

The race was co-organized by Shengjing and the Yellow River Stone Forest Scenic Area Management Committee, a local government body, according to the race website. The committee said it was only an “assisting” organizer providing the race venue.

Shengjing was picked as this year’s race organizer because it conducted the race three previous times and the company cooperates with the Chinese Athletic Association, a national sports governing body, according to Meng Pengsen, deputy chief of the planning department of the Yellow River Stone Forest Scenic Area Management Committee.

“We thought they are professional and capable,” Meng said. He acknowledged that the committee doesn’t know much about commercial operation of sporting events.

Jingtai Yellow River Stone Forest Cultural Tourism Development Co. Ltd. was listed as the sponsor of the event. The state-owned company is responsible for the operation and management of the Yellow River Stone Forest scenic area. In March, Yellow River Stone Forest Cultural Tourism Development signed a service contract to procure Shengjing’s event management services for 980,000 yuan ($153,000), according to documents obtained by Caixin.

Shengjing was chosen from three participants as it submitted the lowest price after negotiations, the documents show. The two other bidders were Jingyuan Dingli Advertisement Co. Ltd. and Jingyuan Jiuyi Advertisement Co. Ltd. The three companies were the only bidders over the past three years.

The last three contracts were awarded through negotiations rather than public bidding because the budget was less than 1 million yuan, said Gao Bingshuai, deputy general manager of Yellow River Stone Forest Cultural Tourism Development. Public bidding isn’t required for contracts of that size under the rules of the National Development and Reform Commission, Gao said.

Shengjing and the two other participants interrelate with each other. Jingyuan Dingli’s sole shareholder, Zhang Zhaoming, acts as supervisor at Jingyuan Jiuyi. A printing company majority owned by Zhang was once partially owned by Zhang Xiaoyan, chairman and supervisor of Shengjing, according to business registration information.

Zhang Zhaoming told Caixin that Zhang Xiaoyan is his sister. In preparation for the 2021 race, Zhang Zhaoming authorized Zheng Shirong to manage Jingyuan Dingli, Caixin learned from sources. Zheng was listed as the race director, according to the race website. Zheng didn’t respond to a Caixin request for comment.

Another supervisor and shareholder of the printing company, Zhang Zhaowei, is also an executive and major shareholder of a unit of Zhang Xiaoyan’s Wanmei Industrial Group.

Shengjing won the contract through procurement by a local government-owned company, said Wang Conghu, a government procurement expert and professor at the School of Public Administration of Renmin University of China.

Even though the procurement process appears opaque, it wasn’t subject to public bidding regulations, Wang said. Whether the process violated government procurement law will depend on whether funding for the event came from fiscal revenue, and that isn’t clear, he said.

Under China’s government procurement law, companies with direct shareholding and management relations shall not participate in the same procurement contract bidding.

None of the executives in charge of the race were formal employees of Shengjing but were introduced by friends or were invited to work on the race, Caixin learned.

Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

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